After the holiday season, Yao Ming has just had a “good day”. The stock prices that had previously plummeted are slowly being repaired, and the stock prices of Yao Ming Kangde and Yao Ming Biotech also experienced a sharp rise this Monday, but the good situation did not last long, and this time they were “disrupted” again.

At around 10 p.m. Beijing time on the 6th, the US Senate Homeland Security Committee held a hearing on the proposal. The US Senate version of the “Biosafety Bill” (S.3558) was passed with an 11-1 vote. Next, the committee is expected to first organize and revise the internal bill, and then send the “Biosafety Bill” (S.3558) to the Senate for review and voting by all members of the Senate, but the time for the Senate review has not yet been announced.

As of press release, Yao Ming Biotech's Hong Kong stock had fallen by more than 16%, and Pharmaceutical Kangde's Hong Kong stock had fallen by more than 14%.

The reporter noticed that according to an authoritative US website, the probability that the bill will be passed and promulgated has increased from 18% previously shown to 23% at this stage. Industry experts told the reporter that it is no surprise that the US Senate version of the “Biosafety Act” was passed at the Homeland Security Committee hearing. When the bill enters the Senate review and voting stage, there may also be revisions and adjustments. Furthermore, it is worth paying attention to when the Pharmacovigilance stock price will desensitize the bill process. However, in any case, Pharmacovigilance and Chinese biomedical companies should consider “bottom line thinking” and “backup plans” more at this stage.

The “Biosafety Act” was passed at the hearing by a huge margin of 11 to 1

At 10:30 p.m. on March 6, Beijing time, the US Senate Homeland Security Committee proposal hearing was held as scheduled. At this hearing, as many as 20 proposals were reviewed, including the US Senate version of the “Biosafety Act” (S.3558), which has attracted the attention of the Chinese biomedical industry.

According to Reuters, the “Biosafety Act” (S.3558) was proposed by senior US Democratic Senator Gary Peters (Gary Peters). Its core content is to prohibit US federal agencies from signing contracts with Chinese universities, Pharmacomics, and other notable biotechnology companies. It also wants to prohibit the Government from entering into contracts with businesses that use the company's equipment or services.

At the above hearing, the Biosafety Bill (S.3558) passed the review with 11 votes in agreement and 1 against. Among them, the legislators who co-sponsored the bill all participated in the hearing.

This means that the Biosafety Act (S.3558) has officially passed the “second reading” and will soon enter the Senate for the “third reading”.

According to GovTrack, an authoritative US law disclosure website, the probability that the bill will be passed has increased from 18% previously shown to 23% at this stage.

Also being promoted at the same time as the “Biosafety Act” (S.3558) is the “Biosafety Bill” (H.R. 7085) proposed in the US House of Representatives by Representative Mike Gallagher (Mike Gallagher), chairman of the US-China Strategic Competition Special Committee. The bill's previous introduction caused a sharp decline in the domestic pharmacology and CRO sectors.

The reporter learned two statements about the subsequent progress of the bill. One is that according to the legislative procedures of both houses of the United States, the bill is usually proposed by both houses at the same time. If the Biosafety Act is passed by all votes, it will be directly submitted to the President for signature, and it will officially take effect after the president signs it. If a different version of the Biosafety Act is passed by the two houses, the two houses will establish a consultative committee to resolve the differences.

Second, according to GovTrack, an authoritative US law disclosure website, the “Biosafety Bill” (S.3558) will be sent to the House of Representatives for review after being passed by the Senate, and the corresponding House of Representatives committee will review it. The committee may revise the proposal, then submit it to the full House of Representatives for a vote, and if the vote passes, it will be submitted to the President of the United States. The President has the option to sign the proposal.

In particular, according to reports, Biden signed an executive order last Wednesday to “prevent large-scale transfers of Americans' personal data to countries of concern,” including genomic, biometric, geolocation, and financial data. This executive order may restrict genomics companies' activities in the US rather than contract research institutes such as Pharmacomics. The industry believes that this move will reduce the pressure on congressional Democrats to support Chinese CRO laws such as Yao Ming Kang De and Yao Ming Biotech.

The US Senate and House of Representatives is the only real game market. The industry thinks there is a possibility that there will be revisions

“Actually, we are not surprised that the bill was passed at the Senate hearing.” Lai Chuanliang, senior partner and fund manager of Shenzhen Qianhai Ruifeng Capital Management Co., Ltd., explained to reporters because members of the US Senate Homeland Security Committee are “hawks” among the “hawks.”

Meanwhile, on the US Senate's official website, the reporter noticed that the only negative vote at the hearing was cast by Republican Senator Rand Paul (Rand Paul) from Kentucky.

Rand Paul stated his only reason for casting a negative vote at the above hearing: “I'm also concerned that the company banned here actually has many different applications throughout the supply chain, and we haven't done enough research to understand the consequences of banning this kind of behavior.” He fears that this will eventually be attracted to protectionism and will eventually lead to higher consumer prices in the US.

Lai Chuanliang also pointed out that rational opponents, represented by Rand Paul, may emerge endlessly in the subsequent deliberation process in the Senate and House of Representatives, because “decoupling” in the CRO field is not in the interests of the US biomedical industry, and a rational voice representing the industry may be heard in the subsequent US Senate and House of Representatives.

“Therefore, I personally think the Biosafety Act will probably be amended, and the final version may not be what it is now.” Lai Chuanliang made further predictions.

According to reports, Yakming Kangde operates in six US states, including Pennsylvania, California, and Delaware, and its subsidiaries are investing about 500 million US dollars to build manufacturing plants. An investor said that in the first nine months of 2023, two-thirds of its revenue came from the US market. The company also has branches in Europe and China, providing a wide range of services to the pharmaceutical and healthcare industries.

Apart from the two separate proposals advanced by the Senate and House of Representatives, US congressmen have made other moves. On February 12, a bipartisan group of US lawmakers sent a letter to Secretary of the Treasury Janet Yellen, Secretary of Defense Lloyd Austin, and Secretary of Commerce Gina Raimondo, saying that pharmaceuticals threaten US national security.

“Medicinal Kangde did not pose a national security risk to the US in the past, now, or in the future. Even if the US government reviews the company again, it will come to the same conclusion.” After the January 26 crisis, Yao Ming Kant issued several announcements to the outside world emphasizing the above remarks, but this did not have any impact on the active promotion attitude of US lawmakers.

According to statistics, after Mike Gallagher proposed the “Biosafety Act” (H.R. 7085) on January 26, as the situation and stock price escalated, Pharmacovigant issued more than 10 separate announcements, including several targeted clarifications, as well as several disclosures on the progress of share repurchases.

“As can be seen from the series of storms that have passed through the Biosafety Act, the Biosafety Act is like a high-hanging stick. From time to time, it is being brought out to intimidate some of our biomedical companies. Relevant industries and companies should consider 'bottom line thinking' more at this stage and prepare 'backup plan' to prevent the worst from happening.” Lai Chuanliang finally suggested.

Editor/Jeffrey